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Average 10-year fixed student loan rates plummet to near record lows — how to take advantage

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Headed into the 2021 school year, private student loan interest rates dip near record lows. (iStock)

The rate on an average 10-year fixed-rate private student loan plummeted to near record lows last week, reaching 5.47%, according to data from Credible.

This is down from 5.70% the week prior and 5.87% a year ago, nearly tying the record low rate of 5.46% set on June 7, 2021. The 5-year variable-rate student loan, on the other hand, saw an increase to 3.49%, up from the initial rate of 2.98% last week and 2.84% last year. For comparison, these rates hit a record low of 1.84% in February.

If you’re thinking about refinancing your private student loan, now is a good time to consider financing your student loan balance into a 10-year fixed-rate student loan to reduce your rate. It can lower the total amount you pay over the life of the loan beyond the principal, and also lowers student loan payments. Visit Credible to find your rate in minutes.

WITH STUDENT LOAN REFI RATES NEAR RECORD LOWS, HERE’S HOW TO CALCULATE YOUR SAVINGS

If you’re considering taking out a new loan for the upcoming school year as the cost of attendance rises, federal student loans through the Free Application for Federal Student Aid (FAFSA) could be your most favorable option. Such loans could qualify for federal loan forgiveness, typically have lower interest rates, offer deferment options and have other benefits like income-led repayment plans.

However, these are often based on financial need, and if you don’t qualify for federal student loans or the borrowing limit doesn’t cover the full amount you need for college tuition, student loan relief can come in many forms such as private student loans with low interest rates or scholarships. Consider taking out a private student loan now while interest rates are near record lows. A marketplace like Credible can help you find a lender that best fits your needs by comparing multiple lenders at once.

BIDEN ADMINISTRATION CANCELS $500M OF STUDENT LOAN DEBT: THIS IS WHO QUALIFIES

The best student loan interest rates go to borrowers with credit scores of 780 and above, but are available for borrowers with worse credit history. Someone with a minimum credit score of 600, for example, can still obtain a student loan with bad credit, but will pay a higher premium with interest rates as high as 9.82%, on average.

While federal student loan rates are currently lower, at 3.73% as of July 1, 2021, not all students qualify for federal aid. Also, federal loans for some student borrowers could have loan limits, and private student loans are a good way to pay for tuition costs that exceed that limit.

However, there is also other criteria that affects your student loan interest rate, such as having a creditworthy cosigner, the loan type or the student loan repayment term. Also, each lender has its own eligibility requirements for undergraduate students and other borrowers. Visit Credible to view a rates table and compare multiple private lenders at once to compare rates, fees and eligibility criteria.

WILL BIDEN EXTEND STUDENT LOAN FORBEARANCE AGAIN? HERE’S WHAT WE KNOW

Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.

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How Does a Secured Credit Card Work? | Credit Card News & Advice

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Building credit from scratch is often referred to as a chicken-or-the-egg problem. If you don’t have a credit history, it can be challenging to get approved for a credit card. But if you don’t have a credit card, it’s hard to build a credit history.

Here’s where secured credit cards can save the day. It’s possible to be turned down for a secured credit card, but if you’re approved for one, it’s a good way to get started on your journey to great credit.

We’ll start with the basics and work our way up to the advantages – and disadvantages – of secured credit cards.

There are both unsecured and secured credit cards. An unsecured credit card doesn’t require a deposit to get approved for the card. The top unsecured credit cards from major issuers are typically used by those who have at least fair credit. There are some unsecured credit cards available for those with zero or bad credit, but they tend to have high interest rates and fees.

Due to the cost of unsecured cards that target those with little or bad credit, many turn to secured credit cards. Secured credit cards do require a deposit, usually ranging from $200 to several thousand dollars, depending on the deposit requirements of the issuer.

The deposit stays in an account, and the purpose of the deposit is to decrease the risk for the lender. If you don’t pay for the purchases you made with your secured credit card, the financial institution will use your deposit to pay it off.

When you get approved for a secured credit card, you’ll receive a credit card that looks just like an unsecured credit card. There’s no visible clue that the card is secured.

The amount of your security deposit is usually equal to the credit limit for your new secured card. You’ll use your secured credit card just like you would an unsecured card. You can use it for purchases everywhere that accepts your secured credit card.

Just to be clear, your security deposit stays in an account with the issuer. You’ll make payments on your balance from one of your own bank accounts. So, you’re actually buying things on credit.

Most secured credit card issuers report your payment history to the three major credit bureaus: Equifax, TransUnion and Experian. If you can’t find confirmation on the card’s home page that payment history is reported, call the issuer to make sure it’s the policy.

When your secured card’s bill comes, you must pay the bill by the due date. If you pay your balance in full, you’ll avoid paying compound interest. If you consistently make on-time payments and keep low balances on your card during the month, your credit score will begin to increase.

Secured credit cards have many advantages, but there are also downsides to this type of credit card.

  • Secured credit cards help you build credit and develop a good credit score.
  • Secured cards help you learn how credit works. And since the credit limits are on the low side, it helps to minimize your risk of getting into debt.
  • Some credit card issuers will promote you to an unsecured credit card. Not all secured card issuers have unsecured versions, but many of them do.
  • When you’ve built a good credit history and you’re ready to upgrade to an unsecured card, you can get a refund of your deposit.
  • Many secured credit cards offer rewards and benefits.

  • You have to make a security deposit, and this ties up your money for the life of the secured card.
  • Some secured cards have many fees, so you have to read the fine print carefully.
  • You’ll probably have a low credit limit, but this is often a good thing while you’re getting comfortable using credit.
  • Some secured credit card issuers don’t offer unsecured versions, which means you have to apply for an unsecured card from another issuer.

I know it’s difficult to build credit or to come back from a poor credit score. A secured credit card can be a great option, but be sure you read all the disclosure statements and understand if there are fees involved. After about a year of responsible use, you’ll probably have at least a fair FICO score (580-669), which is good enough to make the leap to an unsecured credit card.

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Review: Bank of America® Customized Cash Rewards Credit Card for Students

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Now that most students are starting to return to in-person school, many young adults and their parents are once again looking for the right credit card. Having a credit card offers students a secure and convenient method of payment. It also helps students build credit and even earn some rewards. The Bank of America® Customized Cash Rewards Credit Card for Students excels at all of these tasks.

Key Terms

  • Welcome Bonus: Earn $200 cash rewards after spending $1,000 within 90 days of account opening.
  • Rewards: Earn 3% cash back in the category of your choice including gas, online shopping, dining, travel, drug stores, or home improvement/furnishings. Receive 2% cash back at grocery stores and wholesale clubs and 1% cash back on all other purchases.
  • Annual Fee: None
  • APR: 13.99% to 23.99%
  • Promotional Financing Offer: 15 months of 0% APR on both new purchases and balance transfers.

How This Card Works

This card is a very competitive rewards card, especially for a student card. New applicants earn $200 in cash back after making $1,000 worth of new purchases within 90 days of account opening. You also earn 3% cash back in the category of your choice including gas, online shopping, dining, travel, drug stores, or home improvement/furnishings. Additionally, you earn 2% cash back at grocery stores and wholesale clubs and 1% cash back on all other purchases.

But rewards shouldn’t be the most important thing to students. Instead, consider this card because it’s very easy for Bank of America customers to manage, along with their checking and savings accounts. It also helps students to build their credit by offering them a free FICO score each month. It’s compatible with digital wallet technology and can be managed by a full featured mobile app.

New accounts also receive 15 months of 0% APR financing on both new purchases and balance transfers, and there’s no annual fee for this card.

Advantages

While most student credit cards are very basic, this one comes with generous rewards, including a new account bonus. Other advantages are its promotional financing offer and free monthly FICO score. There’s no annual fee for this card, but that’s expected with a product designed for students.